Tesla Motors Profits Slip, Deny Demand Issues, Sell Most of Bitcoin, Not Sell Dogecoin

  Author: Qian Tongxin

  After the market close on July 20, Tesla reported a second-quarter report showing that auto profit margins fell both quarter-on-quarter and year-on-year, driven by inflation and increased competition for electric vehicle parts.

  In the second quarter, Tesla's revenue was $16.93 billion, up 42% year-on-year; auto gross margin was 27.9%, down from 32.9% in the previous quarter and 28.4% in the same period a year ago.

However, that was partly offset by the profit slump as Tesla has made multiple price hikes on nearly all of its models.

  Tesla CEO Elon Musk denied on Wednesday's earnings call that the impact of the weak economy on demand could lead to a decline in Tesla's vehicle sales.

  Musk also said that Tesla's new plant in Berlin had produced more than 1,000 vehicles per week as of June, and he expects the company's new Austin, Texas, U.S. factory to produce more than 1,000 vehicles per week in the next few months. 1000 vehicles per week.

  He has previously said the two new gigafactories are losing billions of dollars.

On Wednesday's earnings call, Tesla Chief Financial Officer Zachary Kirkhorn said: "Production in Austin and Berlin remains inefficient, which will continue to impact our bottom line in the second half of the year. However, with the gradual ramp-up of the factory, The impact on profits should also gradually diminish.”

  "Tesla's margins are almost certain to decline due to challenges posed by new production increases, especially at the Berlin plant," Morgan Stanley said in a note following the earnings release.

  Affected by inflation and increased competition for parts, Tesla has repeatedly raised the price of electric vehicles to offset the pressure of rising costs.

Musk expressed optimism about inflation during the earnings call.

“I think inflation will come down by the end of the year,” he said, responding to a price hike earlier this month by saying Tesla could cut prices on electric vehicles if inflation “calms down.”

  Tesla has pledged to "break records" for deliveries in the second half of the year and reiterated its goal of 50% growth in average annual vehicle deliveries over the next few years, but did not give a specific target for 2022 in its performance report.

According to the 50% growth target, the annual delivery of Tesla electric vehicles is expected to reach 1.4 million this year.

  In the first half of 2022, Tesla delivered a total of 565,000 electric vehicles worldwide, a year-on-year increase of 46.3%.

According to the June sales data of Chinese cars released by the China Passenger Car Association, Tesla sold 78,906 electric vehicles in China in June, a year-on-year increase of 138%, and domestic deliveries hit a record high of 77,938 vehicles, a year-on-year increase of 177%.

  Tesla’s Shanghai Gigafactory hit a record high in June this year. In the first half of this year, Tesla’s Shanghai Gigafactory produced nearly 300,000 electric vehicles, or about 60% of last year’s annual output.

Tesla China earlier told the first financial reporter: "If there is no impact of the epidemic, the output will be much higher."

  In the second quarter, Tesla also sold most of its Bitcoin holdings.

By the end of the second quarter, the company had converted roughly 75% of its bitcoin purchases into fiat.

That boosted Tesla's cash and cash equivalents by $847 million at the end of the second quarter.

  "The reason we're selling a lot of bitcoin assets is that we're not sure when the impact of the pandemic will ease, so it's important for us to maximize our cash position right now," Musk explained on Wednesday's conference call. He added The sale of bitcoin should not be viewed as some sort of judgment on bitcoin’s trend, he said.

Tesla is not selling any Dogecoin, though, and Musk is a big fan of Dogecoin.